FLTC Position on Tax Favoritism

The Forest Landowners Tax Council opposes any legislation that creates a new special class of private-property purchaser through tax favoritism.

Background: Private property rights advocates are concerned by an unfair tax break, which has been included in the agendas of both the 107th and 108th Congresses. This proposed tax subsidy would give a 25 to 50 percent capital gains tax reduction to those selling private property to government or land trusts for “qualifying conservation purposes.” The language to enact this provision continues to appear in otherwise supportable bills (e.g., The President’s Faith Based Initiative).

Rationale: The creation of this tax loophole by our federal government in order to benefit itself and other favored entities, when in competition for the purchase of private property, is fundamentally unfair and over time – in the extreme – could result in the extermination of private property as we know it. Otherwise legitimate purchasers of private property would be at definite disadvantage when engaged in the competitive bidding process with the new favored tax-class, since the benefit of this legislation only accrues to that favored class; i.e., land trusts and government. Such favoritism also results in removing lands from productive use, considering past ownership/use patterns of the indicated beneficiaries of the provision. Finally, the subject proposal is unlikely to help sellers of private property to any large extent, because the tax-favored bidder will simply discount the bid price just enough to account for the enacted tax benefit and will simply calculate a bid just high enough for purchase.